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Cryptocurrency gains: Income or capital?

Shared from Tax Insider: Cryptocurrency gains: Income or capital?
By Meg Saksida, August 2021

Meg Saksida explains when you need to concern yourself with tax associated with cryptoassets. 

The Bank of England defines cryptoassets or cryptocurrencies as combining two things: ‘crypto’, being hidden or secret and ‘reflecting the secure technology used to record who owns what and for making payments between users’; and ‘currencies’, ‘a type of electronic cash’.  

The big difference between the cryptocurrency and cold hard cash, however, is that our notes in the sterling currency have the backing of the central bank (the UK government), whereas cryptocurrencies use a ‘peer-to-peer’ system, meaning there is no backup should anything go wrong. 

Examples of cryptocurrencies are Bitcoin (the most famous), Ripple, Litecoin, Ethereum, Dogecoin, and Coinye. 

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